The Cost of the Cheap Shirt

Conduct some research about the working conditions and regulatory environment in clothing factories in Bangladesh. Economists warn about quick fixes for wages and the imposition of U.S. safety standards on foreign factories. They offer the following figures to illustrate that the issue of labor conditions in other countries is complex. In Bangladesh, clothing factories get about $6.75 per shirt. These are the factory costs:

$4.75 for the fabric and thread

$1.00 for the shirt's labels

$0.38 wage costs for each shirt (workers earn $70 to $80 a month)

$0.15 per shirt for laundering

That leaves $0.47 per shirt for facilities, shipment, marketing, and perhaps the interest on loans.

The cost of living in Bangladesh is $40 per month for rent, and food per adult is $13 per month. Milk for a child is $5 per month. Those who work in the factories are generally the main wage earners in their families because no other jobs pay as well.

Given this analysis, where do you see some fixes for the safety and wage issues? What needs to be done besides instituting codes of ethics and factory and labor standards?

Assume that you are a manager for a clothing firm in the United States and you are being sent to Bangladesh to select a new manufacturer for your clothing lines. Discuss some of the issues that will affect your decisions about choosing a new facility to work with.